How Pimco Outmaneuvered Apollo and KKR to Win $29 Billion Meta Deal

(Bloomberg) — Morgan Stanley had an unusual message when it approached four of the world’s biggest asset managers in July: they had progressed to the final round of one of the most sought-after private credit deals to date. But if they wanted to get to the finish line, they would need to pair up.

The bank pitted the two teams against each other for the right to give some $29 billion to Mark Zuckerberg’s Meta Platforms Inc. so that it can build a sprawling data center in Louisiana to undergird the company’s most powerful artificial intelligence models.

The deal was so large that Meta and Morgan Stanley didn’t want to rely on just one financial firm, no matter how big, according to people familiar with the negotiations. The bankers put Pacific Investment Management Co. and Blue Owl Capital Inc. on one team, and the private capital behemoths Apollo Global Management Inc. and KKR & Co. on another, to ensure that both pairs would have the ability to fund the whole deal quickly, the people said.

The competition between the firms came to a conclusion in early August when Morgan Stanley gave the nod to Pimco and Blue Owl, Bloomberg reported. The social-media giant opted for a solution that pairs one of the biggest institutional bond firms with one of the fastest growing players in the private credit world.

The decision brought to an end a process that began in early 2025, not long after a dinner that Morgan Stanley hosted to pitch asset managers on the opportunity in funding AI infrastructure. The negotiations that ensued were so complicated that they went on for some eight months after informal discussions began, longer than some of the participants had anticipated, the people said.

All the firms involved declined to comment.

The final result was a particularly important win for Pimco, which has been striving to diversify beyond its background in publicly traded debt. Alongside Morgan Stanley, it will arrange $26 billion of investment-grade bonds for the Meta project, with Blue Owl putting up $3 billion in equity funding.

The intense jockeying that went on behind the scenes underscores the huge financial stakes behind the rise of artificial intelligence, and the rapid build-out of the computing and power infrastructure needed to feed the chatbots sweeping the digital world. This article is based on interviews with numerous people familiar with the deal, all of whom declined to be identified because the discussions are private.

Private Capital

A decade or two ago, this kind of spending could have only been funded through debt and equity raised in the public markets. While some of the big AI projects currently under construction have gone that path, for its biggest data center yet, Meta chose to tap the more opaque wells of private capital that have come to assume an outsized role in the financial system over the last decade.

For borrowers, private credit costs more, but is attractive because it allows them to keep a tighter leash on the process without broadly releasing information about their data centers. For lenders, it offers a bigger return than they would have gotten from Meta’s traditional corporate debt. Deals such as Meta’s also offer additional security to investors because they are backed by valuable real estate and infrastructure.

The Meta financing is not finalized and the details are still in flux, but potential investors have had initial discussions about pricing the bonds at 1.5 percentage points above the company’s publicly traded debt. Some of the securities are expected to be syndicated in the coming weeks.

It is the largest funding package related to a specific AI data center by a wide margin, with others involving xAI Corp. and CoreWeave Inc. worth less than $10 billion. Apollo announced this month that it had agreed to buy a majority stake in Stream Data Centers, its first such acquisition as it capitalizes on the booming demand for digital infrastructure.

The most recent debt deal anywhere close to the size of Meta’s was a $26 billion bond sale to support Mars Inc.’s purchase of rival food-maker Kellanova in March.

The race to capture this business comes with obvious risks. The most visible face of the AI industry, OpenAI, released its latest chatbot, GPT-5, to tepid reviews this month, ramping up questions about whether the progression toward super intelligence is slowing down, and with it, the bid to turn the models into real business opportunities.

But the opportunity is too big for any financial firm to pass up. The data centers being built in just the next two years will require some $150 billion of financing, on top of what the AI companies are funding themselves, according to an analysis released by JPMorgan Chase & Co. on Aug. 7. Half of that could be bundled into commercial mortgage-backed securities, the analysts wrote. But that leaves another $70 billion to $90 billion up for grabs.

AI Gamble

The stage for the Meta deal was set late last year at the private dinner Morgan Stanley hosted for most of the largest private capital firms. The bankers spoke about the massive funding needs of the AI industry, which would, they said, be so large that the asset managers would need to work together.

Not long after, Morgan Stanley began approaching firms about the latest and largest of Meta’s 27 data centers around the world, a 4 million–square–foot complex in rural Louisiana dubbed Hyperion, which is expected to eventually be able to draw, at full capacity, as much as 5 gigawatts of power — roughly the equivalent of 4 million US homes, according to a Bloomberg analysis of government data.

Rather than paying for the center with Meta’s own cash, which would be more expensive, or with straight corporate debt, which would add leverage to the corporate parent, Morgan Stanley proposed a special purpose vehicle that would be tied to the assets themselves.

The process began in earnest back in April when non-disclosure agreements were signed and the first term sheets came in.

Early on, some of the biggest asset managers were eager to handle the deal on their own, people familiar with the negotiations said. And it appeared that Apollo was a frontrunner, Bloomberg reported. The firm had shown its strength last year with an $11 billion deal to help pay for an Intel Corp. facility in Ireland. This was all a crucial part of Apollo’s effort to find a home for the vast amounts of cash its booming insurance business needs to put to work.

Meta, though, kept the process running as it looked for better terms. Negotiations regarding leases, pricing and the private and public elements of the deal were hashed out, as Apollo and KKR sought to secure terms that better suited their insurance funds.

Morgan Stanley reached out to several large Wall Street banks about lending money, and a number of other large asset managers, including Blackstone Inc., Brookfield Asset Management, Ares Management Corp. and Sixth Street Partners, each of which made its own bid.

Those firms all declined to comment.

Syndication Option

By July, Meta and its bankers had narrowed it down to the final four. Apollo was assigned to work with KKR, which has a similar reliance on insurance funding. Pimco and Blue Owl were teamed up because they had already worked together and had each offered to take a different piece of the financing.

The structure pitched by Apollo and KKR would have come with more private terms, which would have restricted the pool of potential investors who could participate in a future syndication and given the lenders more control over the process. By contrast, the format ultimately agreed upon with Pimco — known in the industry as a 144a bond — makes it easier to distribute the debt to other investors in the future.

Pimco agreed to underwrite a portion of the $26 billion of debt and to work with Morgan Stanley to potentially syndicate some of it to other investors. Apollo and KKR had offered to handle the financing themselves and would have relied on their internal capital markets teams if they had distributed any of it to other buyers.

The participants were expecting a final decision by Aug. 1 but the process stretched out for another week as Meta went back to the finalists with more questions, the people said. Eventually, Blue Owl and Pimco got the call on Aug. 7.

The bonds they agreed to will have a tenor of 24 years, including four years for construction before the lease payments begin. The equity for the joint venture will be divided between Meta and Blue Owl, the people said.

Morgan Stanley has helped arrange large private credit deals before. Earlier this year, it worked with Ares on a $5 billion debt package to support Clearlake Capital Group’s acquisition of Dun & Bradstreet Holdings Inc.

–With assistance from Riley Griffin.

©2025 Bloomberg L.P.